Research Shows Publishers Benefit Little From Tracking Ads

Research Shows Publishers Benefit Little From Tracking Ads

Advertising industry lobbyists have long argued that tracking users is necessary to power a publishing industry that makes its content available to users for “free”— despite a heavy privacy cost. Right now, a majority of publishers make money by working with advertisers that collect personal information about users as they move from site to site. Ad companies then combine that information with additional data bought from other sources, such as data brokers, to create detailed profiles they claim are necessary to tailor effective ads to an individual’s interests.

But new research, based on publisher data, has found that using this invasive tracking technique brings publishers just 4% more in revenue — or just $.00008 per ad — than ads based on context (for example, ads for sporting goods placed next to the sports scores).

New research, based on publisher data, has found that using this invasive tracking technique brings publishers just 4% more in revenue— or just $.00008 per ad—than ads based on context

This new report reinforces previous doubts about how much the tracking ecosystem actually benefits publishers. In 2016, Guardian staff bought ads in their own newspaper and found that as little as 30% of the amount spent reached the paper. Together, these studies show that while privacy-invasive behavioral advertising may enrich the adtech industry, it’s little help to publishing businesses scrambling to survive the digital transition. Publishers should rethink their involvement in practices which yield them minor gains but expose them to increased risks in terms of compliance and reputation which may undermine their business.

Advertisers, Not Publishers, Make Money from Ads that Track

Researchers Alessandro Acquisti, Veronica Marotta, and Vibhanshu Abhishek got access to a dataset from a large, unidentified media company that operates multiple websites with different scales and audiences.

Most online ads today are sold in “real time bidding” (RTB) auctions that take place in the microseconds between when you click on a link, and when the content and an ad appears on your screen. RTB is currently the subject of complaints and regulatory scrutiny in Europe. Over 90% of the transactions in this new study’s dataset relate to ads sold in these types of auctions, in which ads are sold as “impressions” associated with data to inform and attract potential bidders. The dataset included the viewer’s IP address, the URL of the page on which the ad was displayed, ad format, price received, and whether cookie information was available. As cookies remain the most popular, but not the only, method of tracking users, this cookie data allowed the researchers to separate ads sold based on context from those that included information about user behavior.

Earlier experiments by the sameresearchers found that advertisers pay up to 500% more for targeted ads than contextual ads. This price increase is heralded by adtech as evidence of their worth. But if the benefit to publishers is just 4%, what happens to the remaining surplus? It is siphoned off by the archipelago of intermediary adtech companies that, alongside Facebook and Google, operate the ad targeting infrastructure.

Publishers Should Put Their Readers First

Publishers should consider whether any small benefits to them from intrusive tracking of their readers’ behavior are offset by direct costs, such as the cost of compliance with laws on data protection. Publishers also should consider indirect costs. The invasion of their readers’ privacy undermines reader trust, which should especially be a concern to publications who are trying to raise voluntary contributions from their readers. Ironically, cross-site tracking can also demonetize their audience, by enabling advertisers to follow readers from a high-value web site and target them on low-end sites where ads are cheap — a process sometimes referred to as "data leakage" or "audience arbitrage."

Given this new paper — and how it challenges the argument that tracking is necessary to support the publishing business — publishers need to reset their association with adtech, and put their relationship with their readers first.

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